Chapter 13.I, Problem 3RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Calculate the missing information on the following revolving credit accounts. Interest is calculated on the unpaid or previous month’s balance.

** Annual Monthly Purchases Payments**

**Previous Percentage Periodic Finance and Cash and New**

**Balace Rate (APR) Rate Charge Advances Credits Balance**

$605.42 ______. 75% ______ $156.12 $200.00 _______

To determine

**To calculate:** The annual percentage rate, finance charge and new balance if previous balance is

Explanation

**Given Information:**

Previous balance is

**Formula used:**

Follow the steps to compute the finance charge and new balance by using the unpaid balance method:

Step1: The formula of the annual percentage rate is computed by multiplying the annual percentage rate and then the answer is divided with the number of months in a year that is by

Step2: The formula of finance charge is computed by multiplying the balance of the previous month with the monthly periodic rate.

Step3: The formula of the new balance is computed by adding all previous month balance, finance charge, purchases and cash advances and subtract the total of payments and credits.

**Calculation:**

Consider that previous balance is

Formula to compute annual percentage rate is,

Compute annual percentage rate by substituting monthly periodic rate equals to

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